Hefty Discounts, Low Gas Prices Drive Strong Car Sales

Wednesday, 03 Sep 2014 01:34 PM

 

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U.S. August auto sales were unexpectedly strong, thanks in part to heavy discounting by the manufacturers, with the industry selling at an annualized pace not seen since early 2006.

General Motors Co. narrowly missed expectations, but held on to the top spot, while Toyota Motor Corp. edged Ford Motor Co. for the second straight month.

The lowest gasoline prices in four years helped GM and Chrysler Group, a unit of Fiat SpA, achieve double-digit gains in sales of full-size pickups, which provide the bulk of profit. But sales of Ford's industry-leading F-Series pickups fell as the automaker began the changeover to an all-new aluminum-bodied version.

With most of the top automakers reporting August sales by midday on Wednesday, Morgan Stanley analyst Adam Jonas said the industry's seasonally adjusted annualized sales rate last month was a higher-than-expected 17.3 million vehicles, well above the 16.6 million forecast from analysts polled by Thomson Reuters. It was the highest rate since 17.6 million in January 2006, according to research firm Autodata.

"The industry had its best August in over a decade, with sales topping 1.5 million vehicles," observed Bill Fay, Toyota Division group vice president.

Auto sales are an early indicator of consumer demand as the industry accounts for one-fifth of all U.S. retail spending.

GM sales fell 1.2 percent to 272,423 vehicles; analysts had expected 272,734. Toyota was up 6.3 percent to 246,100, beating the forecast of 225,973. Ford was up 0.4 percent to 222,174, against the expectation of 216,991.

Chrysler showed a 20 percent gain, to 198,379, compared with a forecast of 185,072, while Nissan Motor Co. Ltd. was up 11.5 percent to 134,388, versus an expectation of 123,855.

Korean automaker Hyundai Motor Co. said August sales were up 5.9 percent to 70,003. Volkswagen was down 12.8 percent to 35,181.

Incentive spending by the industry last month climbed from a year ago, to an average $2,772 per vehicle, but declined slightly from July, according to research firm TrueCar.com. Virtually all major automakers except Nissan boosted discounts from a year ago.

Research firm Edmunds.com said August sales were helped by a higher percentage of zero-interest dealer-financed loans.

Transaction prices in August averaged $32,495, driven by strong sales of pickups and full-size SUVs, according to research firm Kelley Blue Book.

© 2014 Thomson/Reuters. All rights reserved.

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